The recent increase in oil prices by the Oil
Companies Advisory Committee (OCAC) has sent jolting shock waves to
all segments of the society reflected in the sharp reaction by the
provincial assemblies of the federating units of the country, which
have demanded of the government to recall the upward decision.

The abbreviation of OCAC which has increased POL
prices for the third time just in two months has becoming a nightmare
for the people belong to average income group. Though the government
on its part in a bid to justify the decision has referred the oil
prices in other countries, which are higher than Pakistan, but they
forget to look into the income level of the people in this country,
which is also much lower than the countries they are referring to.

The POL products, which eventually play the role of
the fuel for the engine of economic growth in literal sense severally
disrupt to the economic growth, which has just reached at the take off
point.

It has already started affecting adversely the flow
of the economic cycle to a large extent as recent increase in the POL
prices are feared to impair efforts for producing export surplus in
the country. It is extremely painful that the OCAC mainly dominated by
the multinational companies was so arrogant as its members do not
bother to response to the calls of the members of the press for
explaining the rationale behind continuous increase in oil prices. It
is also shocking to note that the OCAC headed by the CEO of a
multinational company simply refused to accept the notifications
issued by the federal government regarding nominations of the
representatives from the public sector into the fold of the committee.
Surprisingly, the government was also supporting the OCAC decision
with out taking into account the sharp reactions from all major
segments of the economy including industry, transport, political
parties and above all the resolution passed by the provincial assembly
of NWFP.

Prime Minister Shaukat Aziz has said that the
government was heavily subsidizing the oil prices to the tune of Rs 40
billion while POL prices were 30 percent lower as compared to the
price level in many countries.

It is for the first time that political leaders
have reacted strongly against the increase of POL prices, otherwise
only affected segments of the economy like transporters and
industrialists used to protest over increase in oil prices.

Prime Minister Shaukat Aziz had promised and had
extended assurance that POL prices would not increase and would
remained capped for a certain period, Chairman SITE Association of
Industry Dr. Mirza Ikhtiar Beg told PAGE.

He said that shooting up oil prices and other
utilities like electricity etc have rendered the cost of production
uncompetitive in the export market.

How our industrial products would survive in the
face of onslaught under the WTO regime when the prices of electricity
and oil, which are the essential industrial inputs, have gone beyond
the level of affordability, said the SITE Chief.

The national economy had just arrived at the point
of a take off but such adverse eventualities if not checked
effectively are feared to make all efforts in vain, he observed in a
depressing note.

Chairman All Pakistan Petroleum Dealer Association,
Abdus Sami Khan, said that as a result of exorbitant increase in POL
prices, it would give way to the smuggling of POL products from
neighboring borders of Iran.

Transporters on the other hand were of the view the
government has virtually given reigns of the oil sector into the hands
of foreign elements in the shape of OCAC. The POL products pricing
mechanism is practically tailored by foreign multinational companies.

It is worth mention that the present chairman of
the OCAC hails from Caltex while the Secretary General represents
Shell Pakistan. The six-member committee of the Oil Marketing
Companies comprised of Farooq Rahmatullah Chairman and Managing
Director of Shell Pakistan, Emmanue Laurenty Chief Executive Officer
of Total-Parco Pakistan, Tariq Kirmani MD PSO, Nadeem A. Jaffery
Country representative of Caltex Oil, Shuiab A. Malik from Attock
Petroleum and a member from Bosicor Pakistan Limited.

"How PSO can make comments over the recent
increase in oil prices as it was a unanimous decision by all the major
oil Marketing Companies as the member of the OCAC," remarked a
PSO official when asked for comments of Tariq Kirmani who is the
Managing Director of PSO.

The OCAC has increased the ex-depot sales price of
petrol by 89 paisas per liter to Rs40.39 from Rs39.50 per liter, while
the price of high-speed diesel (HSD) increased by 25 paisas to Rs26.21
from Rs25.96 per liter. HOBC and kerosene oil prices have been raised
to Rs44.59 and Rs26.04 per liter from Rs43.73 and Rs25.50 per liter,
respectively. Light diesel oil (LDO) has become costlier by 51 paisas
to Rs22.92 from Rs22.41 per liter. Revised prices will be effective
from Dec 15.

OMCs and refineries are tight lipped in giving a
clear picture whether the government has started recovering the
petroleum development levy (PDL) or it is still absorbing the loss.
Market sources said that the government has started the recovery of
PDL from Dec 31, 2004.

OCAC while defending the decision is of the view
that the government had suffered a budgetary hit of Rs40 billion since
May 1, 2004, and continues to absorb the loss.

Though international oil prices had eased a little
bit they, nevertheless, continue to remain substantially higher than
May 2004. It is in this perspective that a minor correction in POL
pricing is being done. The OCAC claims that the prices of POL products
in Pakistan, however, remained substantially lower than the
neighboring country.

The MNCs in order to have absolute authority on
OCAC have refused the entry of one of the nominated member from public
sector, Abdus Sami Khan, Chairman of All Pakistan Petroleum Dealers
Association. There are only two classifications of OCAC members, one
Refinery and second Oil Marketing companies. From refineries there are
four members including Raziuddin the Chief Executive of Attock
Refinery, Qaiser Jamal Managing Director of National Refinery, Shahid
K. Hak Managing Director of Pak-Arab Refinery and Zafar Haleem General
Manager and Chief Executive Officer of Pakistan Refinery.